Section 80GGA under Income Tax Act, 1961 says that any donation made by a taxpayer towards a country's scientific research or country's rural development is eligible for 100% tax deduction. The deduction cannot be claimed by a person whose donation came from income (or loss) generated by business activities or profession; other than that, all other taxpayers are eligible for a tax deduction. Donations can be made in form of cash, cheque, draft, or any other digital payment mode as prescribed by the Reserve Bank of India (RBI). Donations made over and above ₹10,000 in cash cannot be claimed for the deduction, in other words, a tax-deductible donation is only allowed up to ₹10,000 if made in cash.
Who can Claim Tax Deduction under Section 80GGA?
All the taxpayers are eligible to get their tax deducted under Section 80GGA except those whose donations are made from income (or loss) generated from business activities or professions. Taxpayers who have their income under head salary, capital gains, house property, or other sources are eligible for tax deduction under Section 85GGA of the income tax department.
How much Deduction can be Claimed under Section 80GGA?
Unlike Section 80G where there are tranches of deduction under different terms and conditions, Section 80GGA is simple with only one tranche. One can get a 100% deduction of their donation made towards scientific research or rural development institutions. Not all institutions are eligible to get their donations deducted on the donor's end, Institutions approved by the Income-tax department to get their donations deducted from the donor end can only give this facility of tax deduction to their donors. Donors have to be careful while donating and should first know whether the institution is approved by the Income-tax department or not, failing which their donation might not get deducted if they donate to any other non-approved institution.
Suppose you have taxable income of ₹10,00,000 and it is earned from other than business or professional activities, you donated ₹1,00,000 to Approved college by the Income-tax department to conduct Scientific Research, as the conditions are met for the tax deduction, your taxable income would get reduced by ₹1,00,000 to ₹9,00,000.
|₹10,00,000||Taxable income from other than business or professional source|
|₹1,00,000||Donation to approved college for scientific research|
Institutions approved under Section 80GGA for eligible Donations
Following mentioned institutions class can get taxpayers their donation 100% tax deducted.
|Donation Made to (Institution)||Donation made for (Purpose)|
|Prescribed Scientific Research Association, university, college, or other institution||Scientific Research|
|Prescribed Scientific Research Association, university, college, or other institution||Statistical Research or Social Science Research|
|Approved Rural Development Fund, Approved Association or Institution||Rural Area Development|
|Approved Rural Development Fund, Approved Association or Institution||Training of personnel’s for implementing Rural Development Programs|
|Public Sector Company, Approved Institution||Undertaking programs mentioned under Section 35AC|
|Any Approved Fund||Poverty Eradication and Afforestation|
How to Claim Deduction under Section 80GGA
To claim deduction under Section 80GGA Taxpayers would be required to furnish the following documents while filing Income Tax Return (ITR)
Proof of Donation
Taxpayers have to submit Receipts of donations which have to be stamped and should include the registered name of the payee and its registered number, name of the donor, and amount of donation.
Confirmation payment receipt of cheque or draft or any other digital payment method and if made in cash, cash donation slip.
Ensure that you have got this form to get eligible for a tax deduction. Thus, to claim donation taxpayer has to submit these documents while filling for ITR along with the name of done, PAN of done, address of done, and amount contributed.